By grade school standards, the U.S. housing market would most likely get grounded, according to ""John Burns Real Estate Consulting's"":http://www.realestateconsulting.com/home.aspx (JBREC) monthly report card[IMAGE]issued this week. The California-based market research and due diligence firm gave housing an overall grade of D+.

Affordability, which JBREC says is probably the most important indicator of short-term housing market performance, got a C-. This month, affordability improved due to generally declining median home sales prices throughout the country and rock-bottom interest rates, the company said.

""Affordability is so good that owning the median-price home is now less expensive than renting the average apartment,"" JBREC said in its report.

The existing home market worsened this month as the median price and sales volume fell, and the months of supply increased, the firm said, warranting a grade of D+.

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JBREC noted that the seasonally adjusted annual resale activity declined to 5.05 million homes in January, based on numbers from the ""National Association of Realtors"":http://www.realtor.org (NAR), but has increased 12 percent year-over-year, albeit from historically low levels.

Despite the seasonally adjusted decline, on a rolling 12-month basis sales of previously-owned homes have improved for eight consecutive months, the consulting firm reported. The national median price of an existing single-family home dropped to $163,600 in January from $169,600 the previous month.

Still, the number of unsold homes increased to 7.8 months of supply, which is above the historical average, and as of the fourth quarter, 24 percent of all homes with a mortgage throughout the United States were worth less than the outstanding balance.

The housing supply is the industry's biggest trouble spot, earning a failing grade of F from JBREC. In general, the housing supply held relatively steady this month, albeit at very low levels, the report said. Total completions fell, but new home starts increased in January in both the single-family and multifamily sectors.

Although vacancy rates in the United State have improved in recent quarters, the majority of the country remains oversupplied compared to history, JBREC said. Just six states are currently undersupplied - Oklahoma, Wyoming, New Mexico, North Dakota, South Dakota, and Alaska. The homeowner vacancy rate increased again in the fourth quarter of 2009 to 2.7 percent, which is up from 2.6 percent in the third quarter.